Chairman's Statement

Extracted from Annual Report 2011

Dear Valued Shareholders,

On behalf of the Board of Directors, I take pleasure in declaring yet another year of commendable improvement in our Group's performance for the financial year ended 31 December 2011 ("FY2011"). This further enhances our business standing and reputation in the industry.

In FY2011, we delivered our seventh consecutive year of record earnings since the financial year 2004. This is especially encouraging given that the results were achieved against the backdrop of an uncertain global economy.

Our full year net profit increased by 16% to $49.7 million on the back of revenue of $183.7 million in FY2011. The improved bottomline was lifted by an increase in the Group's other operating income of $14.5 million, due to higher fair value gains on retail shops in Roxy Square and the transfer of Kovan Centre from investment property to development property.

SEGMENT HIGHLIGHTS

For the full year ended 31 December 2011, our Group achieved a total revenue of $183.7 million. Revenue from our Property Development segment contributed $132.6 million or 72% of our Group's turnover. The remaining 28% of the Group's turnover in FY2011 was attributable to our Group's Hotel Ownership segment and Property Investment segment which registered revenue of $48.4 million and $2.6 million respectively during the year.

Property Development: This segment remained the core focus of our Group. We continued to develop quality boutique projects that appeal to the masses. Due to the absence of revenue recognised from three development projects which were completed in the year earlier, revenue from our Property Development segment was 22% lower at $132.6 million in FY2011. On a brighter note, this segment has accumulated a balance attributable progress billings of $598.6 million, which will be recognised from FY2012 to FY2015. This is more than four times the revenue recorded by the segment in FY2011.

Hotel Ownership: In line with the continual high number of visitor arrivals to Singapore, our Group's Hotel Ownership segment registered a 9% increase in revenue to $48.4 million in FY2011. This was largely attributed to the increase in our hotel's average occupancy rate (AOR) and average room rate (ARR) which climbed to 94.6% and $188.3 respectively during the year. Consequently, revenue per available room (RevPar) of our hotel was lifted by 13.7% to $178.1 in FY2011.

Property Investment: Revenue contributed by our Group's Property Investment segment fell by 19% to $2.6 million in FY2011 as a result of the redevelopment of Kovan Centre. The lower rental income from Kovan Centre in FY2011 was partially offset by higher rental income from our Roxy Square retail shops which continued to enjoy high occupancy rate of close to 100% during the year.

FINANCIAL POSITION

As at the end of FY2011, our Group maintained our strong financial position with a healthy cash and cash equivalent position that stood at $228.2 million. Net Asset Value per share was also reportedly higher by 23.6% to 32.98 cents per share. Correspondingly, revalued net asset value was lifted by 29.8% to 87.05 cents per share after adjusting for the fair value of our hotel and office premises as at 31 December 2011.

OUTLOOK

Despite a challenging economic outlook at the Europe front, Singapore registered a year-on-year economic growth of 4.9% in 2011. However, the Government is expecting the country's GDP growth to decrease to 1% to 3% in 2012 in view of the prolonged European debt crisis and uncertain economic recovery in the US.

Property Development

In 4Q2011, the Singapore Government announced the latest round of property cooling measures, the most significant of which was the introduction of the Additional Buyer's Stamp Duty ("ABSD") on certain categories of residential property purchases, ranging from 3% to 10%.

Following the several rounds of Government measures rolled out last year, property prices have continued to slow down in 4Q2011. Based on the latest statistics released by the Urban Redevelopment Authority, the rate of property price increase continued to moderate for nine consecutive quarters since 4Q2009. As such, we expect more price moderation to take place going forward as a slowdown in the Singapore economy and uncertainties in the global economic outlook begin to set in.

Notwithstanding the economic downturn and ongoing policy intervention headwinds in the property market, our Group is confident that we will be able to ride through this challenging environment as we enjoy high earning visibility from our progress billings of $598.6 million accumulated from 12 development projects - The Verte, Nova 88, Haig 162, Straits Residences, Studios@Tembeling, Jupiter 18, Spottiswoode 18, Space@Kovan, Nottinghill Suites, Wis@Changi, Centropod@Changi and Treescape - launched over the past year or so. Of these, Centropod@ Changi and Treescape were launched in December 2011 and February 2012 respectively, both of which saw positive take up rates of more than 75% as of to-date.

The progress billings will be recognised from FY2012 through to FY2015, thus providing our Group with a healthy cash fl ow and contributing to our Group's bottom-line in the years to come. Together with a landbank of approximately 14,184 sqm and a focused and experienced management team, we are in a buoyant position to prudently seize future suitable opportunities in the residential, commercial and mixed-use development segments.

Hotel Ownership

According to the Singapore Tourism Board's latest figures, visitor arrivals to Singapore surged to a new record high of 13.2 million in 2011, exceeding the year's forecast range of 12-13 million.

As Singapore remains to be an attractive destination for business travellers and recreational tourists, the overall hotel industry has been greatly boosted by the swelling number of visitors arriving in Singapore during the past year. With our hotel located in a key strategic area, with close proximity to the Integrated Resort and business district, our Group believes that we should continue to reap the benefit of this strong tourism momentum as demand for hotel rooms remain stable in 2012.

Property Investment

With the redevelopment of Kovan Centre in FY2011, our rental income is expected to be lower in FY2012. Having a strong cash holdings, we are in a good position to seize future opportunities and acquire suitable investment properties to boost our recurring income.

AWARDS AND RECOGNITION

During the year, our Group is proud to be the recipient of two widely recognised regional and local awards, namely, the Best Small Cap Company in Singapore as compiled by FinanceAsia, the authoritative Asia Pacific financial magazine; and the "Fastest Growing 50" Corporates as credited by DP Information Group, Singapore's veteran information and credit bureau. This is the second consecutive year that our Group has been awarded the "Fastest Growing 50" title. These accolades are a testament of our strength and achievements in the industry and serve as an impetus for us to continue to deliver stellar performance in the years to come.

DIVIDEND

In view of our positive performance, we would like to share our achievements with our shareholders. As a form of appreciation for their unwavering support and faith in our Group, the Board of Directors will be proposing a final cash dividend of 2.0 cents per ordinary share, which is 33% higher than the previous year, at the next Annual General Meeting.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors, I would like to extend our gratitude towards our Board members, management and staff for their contribution and faith in the Group, which has propelled us to new heights. I would also like to thank our shareholders, customers and business partners for their continuous support and commitment towards the Group's cause over the years.

Teo Hong Lim
Executive Chairman and
Chief Executive Officer